Many small businesses across the United States fail each and every day and while many people tend to blame it on the current state of the economy, much of this failure is actually due to lack of funding, funding, funding and more funding and also poor financial management. Procuring the proper funds for a business through a series of loans and grants—and then using this money wisely—is important for ensuring the success of any small business.
Funds for a small business can be obtained in any number of ways, whether business owners choose to save the money to personally fund the company, borrow money from a private lender or the federal government, or take advantage of the more than $40 billion in government grants for small businesses that is set aside every single year. Savvy business owners will make use of all three of these options. Saving money for a down payment on a business venture will help ensure that lenders do not simply look over the loan application and toss it aside. Individuals who can show such financial stability receive the best rates on loans and are often chosen for grant opportunities, as well.
There are dozens of various grants available to small business owners, and these can be a very important source of financial help when they are utilized correctly. Businesses that will ship products overseas, that are involved in the agricultural industry, that are owned or operated by minorities, or that fall into any number of categories can all receive grants for getting started or for expanding. While many business owners tend to overlook these grants because the process of obtaining these funds seems daunting at best, this is a critical error that could mean the difference between long-term success and the failure of the company.
Once the proper funding for a business venture has been procured, business owners must then be sure to manage this money wisely. There are typically terms and conditions associated with federal grants that dictate how these funds must be used, but business owners who use their own funds or those that were obtained through loans have quite a bit of flexibility. Developing a financial plan for the business and reducing overhead expenditures wherever possible—without compromising the integrity of the business—is crucial for overall success. Sometimes it is best to hire an outside agency to keep track of business spending and provide financial counseling along the way.
Ways to Prevent and Handle Cash Flow Shortages
There is no amount of financial help in the world that can guarantee a business success if the owner does not know how to prevent and handle cash flow shortages. Some of the things that can be done to prevent these include setting policies for sale and credit—and sticking to them, sending invoices for jobs or products regularly, providing small discounts for those individuals or companies who pay their invoices on time, and practicing fair debt collection techniques if any invoices go unpaid. If a cash flow problem should rear its ugly head despite these tactics, business owners can check the availability of grants for their particular type of business in order to receive additional funds.
Choose a Venture Based Upon Available Funds
Aside from simply providing grants to existing business owners or those who already have a business plan in mind, there are also funds available that are designed to pay individuals or companies to assist in federal projects. There are plenty of industries that can benefit from these projects as the government is known to hire construction workers, teachers, healthcare personnel and more in an effort to provide services to government officials and the general public. Taking advantage of these funds sometimes means relocating to a designated part of the country in which the federal services are needed, as well.
Obtaining funding for a small business venture or to help a small business expand is only the first step in ensuring the success of that company. Managing these funds wisely through a series of steps designed to prevent and deal with cash flow problems is a necessary skill and one that all business owners will do well to learn.